Financial Times

JKH succession and Cola wars
Last week's announcement that John Keells Holdings chairman Vivendra Lintotawela is to retire in one year's time and that he would be succeeded by one of the joint managing directors, Susantha Ratnayake, provides some clarity about the succession at one of the island's top conglomerates.

There have been many rumours swirling around the markets for some time now about impending changes at the top of the conglomerate. The silence maintained by the company on the issue also did nothing to help clarify the situation.

At the time Lintotawela became chairman there were rumours of a boardroom power struggle involving the next in line - Ratnayake and Ajit Gunewardena. Subsequently, they were named joint managing directors, a new position in the company. This only added fuel to the rumours. It remains to be seen whether the position of joint managing director would be continued.

While Ratnayake has now been appointed deputy chairman, in preparation for his planned take over from Lintotawela on January 1, 2006, Gunewardena has been named deputy chairman and presumably would eventually succeed Ratnayake as chairman.

A lengthy stay in India by Lintotawela in March this year, which the company said was for medical treatment, also led to a spate of rumours at the time of a shake-up in the management of the conglomerate.

Reports at the time said the top management was under pressure from certain big shareholders, such as foreign fund managers, to improve the company's profitability in terms of its size and capital base.

However, these were dismissed by JKH executives who maintained the company was performing according to expectations and that shareholders had not expressed dissatisfaction in the way it was managed.

Such rumours and interest in the inner workings of a company as big as JKH is inevitable. JKH is one of the biggest companies in the country and for long was the highest capitalised stock on the Colombo bourse.

Our listed corporates still tend to be somewhat reticent, even secretive some would say, compared with their counterparts in more developed markets. The early announcement about Lintotawela's succession was apparently made with the aim of ensuring an orderly transition and to give time for the markets to digest the news.

However, it remains to be seen whether it would happen that way. A similar thing happened with the retirement of JKH's then-deputy chairman Jagath Fernando. He too made an early announcement of his intention to retire - giving one year's notice - but actually left the company much earlier.

At that time there were rumours he was ousted in a boardroom battle although again this was denied by senior company executives. Fernando's departure which came only a short time after the resignation of JKH's then-director finance, Anusha Coomaraswamy, triggered speculation that things were not quite right at the conglomerate as it was rare for two senior directors to quit within a few months of each other.

Local Cola wins
A small Sri Lankan company has scored a significant triumph over a multinational company with what is perhaps the world's best-known brand name. My Cola's victory against Coca-Cola International USA in the Commercial High Court over the use of similar plastic bottles augurs well for the efforts of local businessmen and should give second thoughts to powerful multinationals bent on bullying enterprising Third World entrepreneurs.

That the court should refuse to issue an interim injunction sought by the multinational and its local unit Coca-Cola Beverages Sri Lanka (Pvt) Ltd against Pet Packaging (Pvt) Ltd, makers of My Cola, on the grounds that Coca-Cola suppressed important material facts from court, shows the kind of dirty tricks even supposedly respected multinationals can practise.

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